Hospitals, states face challenges under new health regime-Moody's
March 14 |
March 14 (Reuters) - Cuts in federal funds for hospitals serving low-income patients, which are set to begin later this year under the new U.S. healthcare law, will create budget challenges for both hospitals and states, Moody's Investors Service said on Thursday.
The ratings agency said it expects the cuts to federal disproportionate share hospital (DSH) payments to rise to $17 billion annually by 2019 after scheduled reductions begin on Oct. 1.
DSH adjustment payments provide additional help to hospitals that serve large numbers of low-income patients.
The DSH payments will be reduced as part of an expansion of the Medicaid health insurance program for the poor under the Patient Protection and Affordable Care Act, more commonly known as "Obamacare." As the program expands, those payments will be reduced by half.
States that choose to opt out of Medicaid expansion but have a high number of uninsured residents will feel the greatest budget impact, Moody's said, as they could face both political and economic pressure to make up for the federal funds.
The rating agency also said "large, urban safety net hospitals that typically treat large populations of Medicaid and uninsured patients are most at risk from the DSH phase-out."
Among the states with the highest uninsured rates and who are undecided, but leaning towards opting out of the Medicare expansion are Texas, Georgia, Idaho, Louisiana, North and South Carolina and Wyoming.
The law calls for DSH payments to be restored in 2022, but Moody's said that current Congressional budget battles put in doubt any return to full funding.
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